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Standard Costs and Balanced Scorecard Report

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Updated: Sep 10th, 2022

Abstract

The research paper focuses on the study of the balanced scorecard as a tool to generate the optimum standard cost benchmarks. Further, the research centered on the effect of Ron’s faking of his performance during the research on the balanced scorecard results and the establishment of standard costs. Furthermore, the research focused on the effect of Ron’s lackluster performance on the Company, Camden. Lastly, the research spotlighted implementing a better-balanced scorecard and standard cost level research process.

Discussion

Niven emphasized that the balanced scorecard process measures work performance as a basis for establishing realistic standard cost benchmarks. The process focuses on the effect of Ron’s lackluster performance on the establishment of standard cost levels (Niven, 2006). A correctly executed balanced scorecard research ensures the establishment of the optimum standard cost levels.

Further, Smith reiterated that Ron greatly benefitted from his lackluster work performance. Consequently, Ron can easily reach his performance goals using lesser effort when compared to complying with a higher performance benchmark. Ron must work harder to reach a higher standard cost benchmark if he displayed his normal performance during the balanced scorecard research. After reaching the unchallenging performance benchmarks, Ron can reduce his work output. Ron’s advantage is due to the erroneous setting of a lower than normal standard in areas of financial performance, internal processes, customers, learning, and growth factors (Smith, 2007).

Consequently, Smith theorizes that Ron’s employer, Camden Manufacturing Company was harmed by Ron’s intentional work slowdown. In terms of the balanced scorecard strategy, the company’s financial performance, internal processes, customers, learning, and growth factors were understated. The Camden Manufacturing company had to erroneously set the objectives, measures, targets, and initiatives of each factor because of Ron’s fake performance. Under this situation, the company loses net profits and revenues equal to the difference between Ron’s fake actual performance level and the true performance level (Smith, 2007).

Furthermore, Fraedrich emphasized that Ron was unethical in the way he performed during the study. Ethics states that a person should not violate moral standards. Moral standards include avoiding acts that may hurt or infringe on the rights of other persons. By faking his real performance, Ron violated ethical standards because the balanced scorecard-based standard results are erroneous. Consequently, the company will be hurt in terms of lower revenues and lower net profits from Ron’s unethical performance during the balanced scorecard performance research (Fraedrich, 2009).

Furthermore, Smith proposed that the company should implement steps to successfully gather valid and relevant data to ensure the implementation of the correct performance-based balanced scorecard. One important measure is for the researcher to avoid informing the research subjects they are being observed. This will prevent employees from doing faking their performances. Next, the researcher can secretly observe a minimum of 70 % of the entire workforce doing the same redundant jobs. The average job performance results covering 70% of the population will be used to generate a more credible standard cost level. This research strategy will generate a better standard cost performance benchmark as compared to studying only Ron’s fake performance (Smith, 2007).

Conclusion

BRIEFLY, the balanced scorecard tool is used to determine the optimum standard cost benchmarks. Ron’s faking of his performance during the research is advantageous to Ron because he can easily achieve performance goals with less effort. Consequently, Ron’s substandard performance reduces the company’s profits and revenues. To prevent fake performance, a minimum of 70 percent of the total workforce doing a similar job should be secretly observed to generate more realistic results. Further research can focus on the exact number of subjects needed to make a more convincing balanced scorecard research outcome. Indeed, the balanced scorecard research should be effectively implemented to generate the optimum standard cost benchmarks.

References

Fraedrich, J. (2009). Business Ethic.New York, N.Y.: Cengage Press.

Niven, P. (2006). Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results.New York, N.Y.: J Wiley & Sons Press.

Smith, R. (2007). Business Process Management and the Balanced Scorecard.New York, N.Y: J. Wiley & Sons.

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IvyPanda. "Standard Costs and Balanced Scorecard." September 10, 2022. https://ivypanda.com/essays/standard-costs-and-balanced-scorecard/.

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IvyPanda. 2022. "Standard Costs and Balanced Scorecard." September 10, 2022. https://ivypanda.com/essays/standard-costs-and-balanced-scorecard/.

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IvyPanda. (2022) 'Standard Costs and Balanced Scorecard'. 10 September.

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